Alibaba, Baidu, beat earnings expectations, attract investors

Trevir Nath, Estimize director of content

Published 3:59 PM ET Wed, 4 May 2016
Estimize

Adam Jeffery | CNBC

Trader on the floor of the New York Stock Exchange during Alibaba IPO, September 19, 2014

Whether it's Baidu or Alibaba, many China-based companies are making a name for themselves in the U.S. markets. Baidu is frequently called the "Google of China" while Alibaba is referred to as the "Amazon of China," but that isn't what resonates most with investors.

Each quarter these two names manage to top their already lofty expectations while maintaining an industry lead in the region. These companies regularly experience upward revisions activity, robust projected growth rates and have a steady history of beating estimates.

Last week, Baidu continued its winning streak with first-quarter results that topped both earnings and revenue estimates. China's Google posted profits of $1.06 per share on revenue of $2.45 billion, reflecting a 20 percent increase in sales. Analysts had expected earnings per share of 83 cents on $2.32 billion in revenue, according to the Estimize consensus data.

Tomorrow Alibaba steps up to the plate with momentum on its side. Heading into the report, analysts have revised earnings per share estimates up 14 percent, now expected to come in at 63 cents, according the crowdsourced data. Revenue, on the other hand, is on pace to hit $3.62 billion, a 29 percent increase from a year earlier.

Alibaba was quick to capture a stake in Chinese e-commerce and hasn't looked back since. Like Baidu, Alibaba continues to expand beyond its core business through acquisitions and strategic partnerships. The segments BABA operates in include cloud computing, online video, communication platforms and a car-hailing service similar to Uber.

Additionally, overall gross merchandise volume growth for the March quarter has been promising, with mobile monetization rates as the primary driver. Alibaba's leading market share on top of an abundance of untapped opportunities in China bodes well moving forward.

Alibaba was in the news recently when its affiliate closed a funding round valued at over $4.5 billion, making it the second-most-valuable private technology company only behind Uber. Ant Financial runs China's biggest payment platform, Alipay, which services 450 million active users and processes 170 million transactions per day.

Last month, Alibaba also announced it would spend $1 billion for a controlling stake in Singapore e-commerce startup Lazada Group. Shares are now up nearly 20 percent in the past three months.

Chinese companies including Baidu and Alibaba have been on acquisition sprees as they seek to expand into new areas and meet the lofty expectations. Alibaba's earnings tomorrow will give some clues as to whether or not these initiatives have legs.

How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!